Government Evidence Shows Energy Costs are Hurting Energy Intensive Industries

Commenting on a report published by the Department for Business, Innovation and Skills* on Friday 13 July, which shows that the UK cement industry is significantly disadvantaged by the cost of energy and climate change policies compared to its main European and global competitors, the Mineral Products Association (MPA) said that the new data confirmed what they had been telling Government for the past year.

"While accepting that there is a need to manage our response to climate change our members have been telling us for some time that they have been struggling with the cumulative burden of rising electricity costs and 'green taxes' designed to accomplish this", said Nigel Jackson, Chief Executive MPA. "In turn we have conveyed these messages to Government in the strongest possible terms. Now its own commissioned work backs this up."

The UK cement industry has reduced its CO2 emissions by 57% since 1990 so its commitment to tackling climate change is not in question. But cement is an internationally traded commodity and, if it costs more to make it here than to import it, then we are threatening a strategic indigenous manufacturing industry for no environmental gain. Cement is one of the key ingredients in concrete; the second most consumed substance on the planet after water. Our homes, schools, hospitals, roads, railways and much more all depend on these essential mineral products. If we don't have a healthy domestic industry to supply UK demand it will have a material cost impact on the £120 billion construction industry and we will create an unnecessary risk to our security of supply.

It is in the Government's gift to do something about it and they have taken the first step in doing this by announcing in the 2011 Autumn Statement £250 million to compensate some energy intensive industries against these unfair electricity costs. Unfortunately, the cement industry will not qualify for a share of the first £110 million of this because the EU has ruled against such support for the sector, in relation to indirect costs associated with the EU Emissions Trading Scheme. The Government is currently collecting data to help shape its proposals for the remaining support. The newly published report clearly shows that the UK cement industry must receive some help if it is to survive to supply the UK's low carbon economy.

"The Government now have the evidence to corroborate the industry evidence", said Jackson, "it is time for them to respond and take the action we have been urging them to take for so long and to come forward with their long awaited Energy Intensive Industries Strategy."

 
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